Rockingdeals Circular Economy Ltd Q4 FY2024 Concall Summary

Key Takeaways

• Volume-driven hypergrowth, no numbers promised: Revenue rose 228% in FY24, entirely volume-led, but management repeatedly declined to quantify future growth, margins or segment splits.
• The model is a sourcing-and-disposal machine: The company is stitching together exclusive brand tie-ups (Puma, Whirlpool, Wipro), new channels (Amazon refurbished, franchise stores, exhibitions) and a Dubai subsidiary to feed both sides of the circular economy flywheel.
• Margins are thin and under pressure, with a small merger tailwind: Current net margins sit at ~11%, not 16%, and volume growth may compress gross profit; the Rockingdeals India merger is expected to add 1–2% at the bottom line.
• The competitive landscape is a vacuum, not a moat: Management says the market is mostly unorganized with "no brand at this level," which is both the opportunity and the risk as the company tries to organize it.
• What to watch next quarter: Whether the 20-brand pipeline converts into signed exclusive deals, the pace of retail store and warehouse expansion, and any actual disclosure of B2B/B2C or category-level revenue splits once operations are consolidated.

Business Model & Revenue Engine

• Core proposition: The company buys excess, e-commerce and pre-owned inventory at deeply optimized costs, then sells it through all available channels. The value proposition to brands is cash recovery plus environmentally sustainable disposal; to customers, it is a steep discount to online and brand factory outlet pricing.
• Pricing anchor: Prices must undercut what online channels charge and beat the 50–60% discounts brand factory outlets offer. The underlying floor is the rate at which brand-new or online inventory sells.
• Volume, not price, drives growth: Revenue rose 228% in FY24 and PAT rose 259%, both on volume. The company is educating brands and customers on the circular economy concept, and post-IPO brand signings plus streamlined sourcing are the engine.
• Revenue mix is deliberately fluid: The company is a "deal store" that does not tie plans to any brand or category. If Puma inventory is abundant one quarter, Puma dominates; if Skechers or another category the next, the mix shifts. Management declined to provide a category or brand-level revenue split.
• Channel structure: Under the pre-merger setup, the highest-margin channel is proprietary retail. Other channels include PAN-India unorganized partners who buy inventory and Amazon under the renewed/refurbished category. FY24 revenue was entirely B2B; a B2B/B2C split will only be disclosed once operations are consolidated.
• Inventory risk is managed through cost and liquidation events: The cost of buying is so optimized the company can discount as deep as 90%. Category C/D non-moving inventory is liquidated through garden sales events drawing ~18,000 walk-ins, held quarterly or biannually. Exhibitions and events will accelerate liquidation, with Category A inventory routed to tier 2/3 cities.

Aman Preet: "See our business model for now we are focusing on excess inventory and e-commerce inventory and trying to bring more and more brands on board, make them also aware about this concept. And same is on a customer side as well making more and more customers aware of what excess inventory is or what the circular economy is about."

Brand & Channel Partnerships

• Exclusive Puma agreement: A three-month exclusive arrangement for Puma's excess sportswear inventory was closed "as we speak yesterday also," adding a marquee brand to the sourcing roster.
• Wipro authorization: Wipro Private Limited authorized the company as a non-exclusive channel partner to clear excess air conditioner inventory across India.
• Whirlpool partnership: The company is a partner to liquidate Whirlpool's leftover or second inventory of air conditioners.
• Vendor agreements signed: New agreements with Ajmal Essence (perfumes), Myntra Designs (fashion and personal care), and Shiv Naresh (sportswear, footwear, equipment).
• Eltus Mode on sale-or-return: Eltus supplies inventory sold across all channels; the company deducts its commission monthly and remits the balance, a capital-light sourcing model.
• Amazon relationship deepening: The company was the first seller for Amazon's refurbished category and started the certified refurbished category in India. Multiple new Amazon contracts are in negotiation; details will be disclosed once signed.
• MoU with Atlas Mode: A memorandum of understanding to collaborate on distribution and marketing of products under the Pure Carting brand.

Aman Preet: "We were the first sellers in Amazon for refurbished on Amazon. So we were the first sellers for Amazon for refurbished category. We started the certified refurbished category in India. So, that's the one liner that I would like to say. So anybody and everybody who's selling refurbished or has sold to refurbished we were the first sellers and the biggest sellers for them."

Margins & Consolidation

• Current margin reality: Net margins are approximately 11%, not the 16% an analyst suggested. Volume growth may pressure gross profit, but management expects indirect costs to grow more slowly, preserving net margins.
• Merger tailwind: The merger of Rockingdeals India Private Limited is expected to add 1–2% at the bottom line and 15–20% at the top line once consolidated.
• Retail channel margin premium: Management gave only a qualitative answer on retail margins, citing a 1–2% near-term increase and operating leverage benefits over the longer term, without disclosing specific channel-level margins.
• Inventory write-offs are negligible: Less than 1% of inventory is written off because the optimized cost base allows discounts as deep as 90% before a loss is taken.

Expansion: Geography, Channels & Warehousing

• Dubai subsidiary: A wholly-owned subsidiary is being incorporated in Dubai, leveraging existing inroads from Indian e-commerce channels to Dubai partners for both sourcing and disposal. The concept is applicable in any country, and Dubai is the first international step.
• India deeper penetration: The company plans to penetrate tier 2 and tier 3 cities through own retail stores, commission agents, business partners and franchise stores. Three franchise stores are already running in the Northeast with one more in the pipeline.
• Guwahati warehouse: A new warehouse is opening to serve the Northeast market, cutting partner lead times and tapping strong local demand for discounted inventory. Management expects it to contribute 30–35% of overall turnover, though it did not answer a question on asset turns.
• Exhibition and event business: A new capex-light channel is being launched due to high demand, starting with cities in and around Delhi NCR and scaling from there.
• Distribution network: The company is working to increase touchpoints directly and through feet-on-street teams.
• Category sequencing: The strategy is to first focus on a few categories, increase the number of brands within them, and then go deeper into those categories.

Competitive Landscape & Market Structure

• Mostly unorganized: Management describes the Indian market as mostly unorganized, with "no brand at this level" and many small players. The thesis is that this market will gradually organize, and the company aims to lead that transition.
• No market sizing provided: Management declined to provide market size or market share figures when asked, leaving the addressable opportunity unquantified.
• Seasonality is neutralized by diversification: Because supply is sourced from many brands across categories, if one brand lacks inventory in a given quarter, another will have it. The company can pick and choose which brand to work with in which quarter.

Management: "Mostly it's unorganized in India. There is no brand at this level. I will say it's more like there are a lot of unorganized players and slowly this market will get organized."

Long-Term Vision

• Full-stack circular economy ambition: The stated goal is to become a 360-degree circular economy solution: buy any kind of inventory (excess, e-commerce, pre-owned), perform QC, refurbishment or repair, sell through all online and offline channels, and scrap non-sellable items in an environmentally sustainable way.
• Future focus areas disclosed: Broadening exclusive sourcing partnerships, venturing into B2B online markets, expanding e-commerce operations, incorporating e-waste operations, enhancing grading and pricing strategies, and investing in technology for efficiency and quality.
• Funding for the next leg: Once the current growth phase is digested, the company will plan how to fund the next leg of expansion.

Aman Preet: "we want to be a full stack e-commerce company who should be able to buy any kind of inventory, be it an excess inventory, e-commerce inventory, pre-owned inventory, do a QC, refurb or any kind of a repair required on it and then sell it through all possible channels, be it online, be it offline. And if it is non-sellable, we should be able to scrap it off in an environmentally sustainable method. So we want to be a 360 degree circular economy solution."

Guidance & Commitments

Key Metrics